NEW YORK (Reuters) - Employers axed payrolls by a shocking 533,000 in November for the weakest performance in 34 years, government data on Friday showed, as the recession inflicted a mounting toll on the U.S. labor market
KEY POINTS: * The Labor Department said the unemployment rate rose to 6.7 percent last month in the highest reading since 1993, compared with 6.5 percent in October, after widespread losses across the country’s major industry sectors. * November’s job losses were the steepest since December 1974, when 602,000 jobs were shed. * analysts polled by Reuters had predicted a reduction of 340,000 jobs. * October’s job losses were revised to show a cut of 320,000, previously reported as a 240,000 loss, while September’s losses were revised to a loss of 403,000 from down 284,00.
“These are horrendous numbers... This is an economy that is in absolute free-fall right now. Confidence has collapsed.
“Obviously at the moment we got the employment plunging, and with employment plunging, consumer incomes are plunging and consumer spending is plunging and we just have a very straight downward spiral right now.
“Look at the private nonfarm diffusion index, which tells you the breadth of the decline, and that index is down to 27.6... This is something across all major sectors with the possible exception of health. They may have added jobs in health, but it’s nothing.
“The unemployment rate only went up to 6.7, so that’s a tiny, tiny piece of comfort compared to the rest of the numbers, which are just disastrous.
“These numbers are so bad, absolutely. They are really horrific and they will massively increase the pressure on the incoming administration to come up with a huge stimulus package.”
JOHN LONSKI, CHIEF ECONOMIST, MOODY’S INVESTORS SERVICE, NEW
“The losses are so broadly distributed that it would be difficult to argue that any unusual event was responsible for the severity of the decline.
“The only positive takeaway would be that the unemployment rate was less than anticipated at 6.7 percent and you did get oddly enough an increase in average weekly earnings thanks to a jump in average hourly earnings.
“But on balance it’s a very weak report. Hours were down sharply in the month of November, and following a deep decline in October.
“All of this warns of a quarter-to-quarter annualized contraction by real GDP by 5 percent if not deeper for the final quarter.
“One thing you don’t want to overlook is that the labor force today is much greater than it was years ago so in percentage terms it probably may not look as bad as the absolute numbers when making a long historical comparison. But make no mistake about it, it’s a very weak employment report and says this is the worst recession since the 1982 recession.
“The additional shocking news was the deep downward revision of previous months...That just adds to the shock value of November’s much deeper than anticipated loss of more than a half million jobs.”
DAVID COARD, HEAD, FIXED INCOME SALES AND TRADING, WILLIAMS
“That’s pretty unbelievable, the change in non-farm payrolls. I’m not quite sure what was going on with the unemployment rate. It can be affected by a number of things.
“The non-farm payrolls number tells it all. That’s pretty dramatic.”
“It’s just a disaster. You’ve got the biggest job losses in 35 years and on top of that about 200,000 of backward revisions.”
TOM SOWANICK, CHIEF INVESTMENT OFFICER, CLEARBROOK FINANCIAL,
“The unemployment data was mixed in that the number of jobs lost was huge, but the earnings were twice what was expected and manufacturing came in better than expected. Overall, the jobs data confirms that the economy shut down during October and November and higher earnings also suggest inflation pressures are real, which is why Treasury bonds are falling.:
STEPHEN MALYON, CHIEF CURRENCY STRATEGIST, SCOTIA CAPITAL,
“The much weaker-than-expected November result alongside a sharp downward revision to October suggests that the U.S. recession underway is going to be a long one. The U.S. dollar has weakened off, indicating that fundamental gravity might finally be weighing on the currency.”
MICHAEL KASTNER, HEAD, TAXABLE FIXED INCOME, STERLING STAMOS
“It’s awful. I thought a number at consensus or below would have seen stocks rally and bonds fall. Now I’m not sure how we trade. The street is really very long Treasuries, so it’s a toss up there. With regard to the stock market it’s not very good. People will have to recalibrate earnings (expectations) lower. For the economy, it’s a chain effect. There are less people working, and so less people buying. We’re in the holiday season and it means sales will be below expectations. The season will be awful.”
JEFF KLEINTOP, CHIEF MARKET STRATEGIST, LPL FINANCIAL, BOSTON:
“Well these are pretty bad numbers. This will be a real test to see how much bad news is priced into the markets. Futures are down quite a bit, but I actually expected them to be down a lot more given these terrible recessionary numbers.
“It might be hard in future months to get numbers that are any worse. It might be good that we raced to some of the worst numbers we’ve had because perhaps it can’t get incrementally worse.”
JOEL NAROFF, PRESIDENT, NAROFF ECONOMIC ADVISORS, HOLLAND,
“This is a clear employment blowout. Firms are reacting as dramatically as they can to make sure they have cost structures they can survive the recession we are in.”
MARKET REACTION: STOCKS: U.S. equity index futures extend slide after worse-than-expected November jobs report. BONDS: U.S. Treasuries spike higher after data. DOLLAR: Dollar falls versus yen.